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Government Business Loan

Government business loan schemes

Last Updated 27th Nov 2020

  • The government provides business loans intending to help the individuals, companies and provide impetus to the economy.
  • Some of the top Government business loans are Mudra loans, PSB business loans and National Small Industries Corporation Subsidy.
  • The government also offers loans specially designed for the women entrepreneurs like Udygogini, Annapurna and Shringar.
  • Individuals above the age of 20 years can apply for Government business loans.
  • Government business loan is offered to Individuals, Startups, Sole Proprietorship, Partnership, MSMEs, SMEs etc.
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Government Business Loan Schemes in India

India is an emerging nation, and Micro, Small and Medium Enterprises play a vital role in driving the growth of the economy. Thus, support for the MSMEs becomes imperative. Government business loans serve the purpose of providing that support by funding to Micro, Small and Medium Enterprises. There are many varieties of these schemes, And the entrepreneurs can decide which one suits their requirement. Let’s discuss the types, features and eligibility criteria of business loans offered by the Indian government.

Mudra loan

The government started mudra loan or Micro Units Development and Refinance Agency (MUDRA) to provide financial support to the startups and small entities by giving them financial support in the form of low credit cost.

Feature of Mudra Loans

  • Mudra loan is also issued by NBFCs / MFIs who are engaged in financing for micro-enterprises in small business activities.
  • The MUDRA loans are extended under the following three categories :
    Loan Amount Category
    up to ₹ 50,000 Shishu
    More than ₹ 50,000 to up to ₹ 5 Lakh Kishor
    More than ₹ 5 Lakh to up to ₹ 10 Lakh Tarun
  • Individuals, Proprietary concern, Partnership Firm, Private Ltd. Company, Public Company, any other legal forms are eligible for applying for the mudra loan.
  • Mudra loan is available at all bank branches across the country.

PSB Business Loans in 59 Minutes

PSB loan was started to simplify the loan approval process for MSME Business and aid the self-employed business in India by reducing the loan approval process. PSB Loans in 59 minutes aims to avail timely finance without undergoing tedious and lengthy formalities.

Features of the PSB Business Loans in 59 Minutes

  • Eligibility for a loan is determined based on Income, repayment capacity of the applicant, existing credit facilities, any other factor set by the banks
  • The credit amount lent under the scheme ranges from Rs 1 Lakh to Rs 5 Crore.
  • The interest rate of PSB starts from 8.50%.
  • Applicants are required to provide the necessary documents for availing the loan. The process is quick, the loan gets an approval within an hour, and loans disbursal is done in a matter of days.

National Small Industries Corporation Subsidy

The mission of NSIC is to promote and support Micro, Small & Medium Enterprises (MSMEs) Sector by providing integrated support services encompassing Marketing, Technology, Finance and other services. It works towards becoming a premier Organization fostering the growth of Micro, Small and Medium Enterprises (MSMEs) Sector.

Benefits of NSIC Subsidy are as follow

  • It offers Small-Scale Industries access to the tenders without any costs.
  • Small Scale Industries are exempted from paying a security deposit for availing finances.
  • The scheme provides a financial facility to the Small-Scale Industries units with the project cost not exceeding ₹ 25 Lakh for the land and building department.

Startup Business loans

Startup refers to those companies which are in the nascent stage of their operation. They play a significant role in providing stimulus to the economic growth, creation of wealth and generating employment. More often than not these companies face the capital crunch, to solve this issue the Government of India has launched many schemes, one such scheme is Stand Up India.

Stand Up India was launched in 2016 and is headed by SIDBI. The scheme is available for all the sectors.

Benefits under the Stand Up India

  • This Government business loan offers loans between ₹ 10 Lakh and ₹ 1 Cr to cover ¾ of the project.
  • The stipulation of the loan being to cover ¾ of the project cost would not apply if the applicant’s contribution along with support from any other schemes exceeds ¼ of the project cost.
  • The interest will be the lowest applicable rate of the bank for that category not to exceed [base rate (MCLR) + 3%+ tenor premium
  • This loan for startups is repayable in seven years with a maximum moratorium period of 18 months.

Govt. Loans For Women Entrepreneurs

Some of the most popular government loan schemes for women entrepreneurs are Udyogini, Shringaar and Annapurna.

Udyogini

Udyogini, which means women empowerment is a scheme for promoting the interest and welfare of Indian women. The scheme is implemented by Women Development Corporation under the Government of India. The scheme assists the women in meeting the capital requirement for the business.

The features of the Udyogini are as follows:

  • The maximum loan offered under this scheme is three lakhs.
  • The applicant should be in the range of 18 years to 55 years for applying for the scheme.
  • The Annual family income must not exceed Rs. 15,00,000.
  • There is no income limit for physically challenged and widowed women.
  • No processing fee and collateral required under the scheme.
  • Individuals are required to provide passport-sized photographs, Aadhaar Card, birth certificate, BPL card, caste certificate, bank passbook, Income certificate and ration card for availing the loan.
  • Loans are offered for 88 business categories which include Chappal Manufacturing, Cleaning Powder, Clinic, coffee & Tea Powder, Condiments, Corrugated Box Manufacturing, Milk Booth, Mutton Stalls, Newspaper, Weekly & Monthly Magazine Vending, Nylon Button Manufacturing, Cotton Thread Manufacturing, Crèche etc.

Shringaar and Annapurna

State Bank of India offers Shringaar and Annapurna loans. Shringaar provides loans for women interested in setting up beauty parlour/ Saloon and Spa, whereas Annapurna provides loans for women interested in the catering business.

Features of Shingaar

  • Minimum age of the applicant must be 20 years and must not exceed 60 years.
  • The repayment tenure is a maximum of seven years.
  • The scheme has tie-ups with Lakme, Naturals.
  • Collateral free loans are also provided under this scheme.

Features of the Annapurna

  • Minimum age of the applicant must be 20 years and must not exceed 60 years.
  • The repayment tenure is a maximum of 3 years.
  • Collateral free loans are also provided under this scheme.

Government Business Loans Eligibility Criteria

Eligibility for Government loans depends upon a variety of factors. Those are mentioned below

  • Age of the applicant: The minimum age of an individual for applying for a government loan should be 18 years.
  • Type of Business: The Government business loan is generally offered to Individuals, Startups, Sole Proprietorship, Partnership, MSMEs, SMEs etc.
  • Credit score: The minimum credit score for a business to get a Government business loan should be greater than 650.

Other important factors are

  • Annual Turnover: Annual Turnover refers to the yearly sales or yearly receipts of a business. It determines the health and activity levels of the fund. This may vary across the Government business schemes.
  • Capital Invested: Capital investment is the procurement of money, obtained by an organisation in order to further its business objectives.

Documents Required to avail Govt Loan Schemes

The documents required for the Government business loan vary from one scheme to another. However, there are a few common documents which an individual is required to submit while applying for the Government business loan.

  • Identity proof : PAN card, Passport, Driving License, Aadhar Card, Voter ID , Govt issued i-card.
  • Proof of Address: Passport, Driving License, Election ID card, Electricity bill or bank statement
  • Age proof: PAN card, Passport, Driving License, Voter ID card, Birth certificate, Employee ID card
  • Business Address proofs: Bank statement, utility bill, Registry copy, lease or rent agreement.
  • Passport size photographs
  • Business plan and details of the credit option individual is applying
  • Goods and Service Identification number (GST Number)
  • Bank Statements for the last six months
  • Income Tax filing for last three years
  • List of company Directors or partners of the company

FAQs

How does Government Business loan work?

Government business loans aim at assisting the people, including the people who are excluded by the private lenders on getting the required amount for bridging the financial requirement.

How can I get a government business loan?

The eligibility requirements for the schemes vary from each other. The basic eligibility criterion is:

  • Age of the Individual
  • Credit amount
  • Business Type
  • Credit Score
  • Annual Turnover and Capital Invested.
    If an individual fits the eligibility criterion of the schemes, then he can either apply for the loan online or visit the bank for the same.

What is the Udyogini scheme?

Udyogini scheme aims to provide subsidised loans to aspiring women entrepreneurs from underdeveloped areas. It offers necessary financial support and thus promotes entrepreneurship, financial empowerment and self-reliance among women. The Women Development Corporation implements the scheme.

How can I get a subsidised Loan?

Subsidised loans are generally targeted for specific groups, and the eligibility criterion of the subsidised loans differ from each other. Individuals can visit the Government website to check the eligibility criteria and apply for the same accordingly.


*Terms and conditions apply. Credit at sole discretion of lender subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and from collected from public sources. Read More
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